Module 2

Module 2: Feedback

Why Lean Startup:

The Lean Startup provides a scientific approach to creating and managing startups and get a desired product to customers’ hands faster. The Lean Startup method teaches you how to drive a startup-how to steer, when to turn, and when to persevere-and grow a business with maximum acceleration. Too many startups begin with an idea for a product that they think people want. They then spend months, sometimes years, perfecting that product without ever showing the product.

Most startups fail from lack of paying customers:
Allow you to minimize your risks and ensure that you are making something people want to pay for.

Lean Canvas:
Lean Canvas is heavily “problem focused”. Both the canvas and methodology emphasize understanding the problem as a requisite first step.
It is a blueprint that guides entrepreneur as they navigate their way from ideation to building a successful startup.
The lean canvas is*:

Fast
Compared to writing a business plan which can take several weeks or months, you can outline multiple business models on a canvas in one afternoon.

Concise
The canvas forces you to pick your words carefully and get to the point. This is great practice for distilling the essence of your product.

Portable
A single page business model is much easier to share with others which means it will be read by more people and probably also more frequently updated.

Lean Canvas Section 1-4:

2. Problem: top three problems you intend to solve with your product.
Note: Most startups fail, not because they fail to build what they set out to build, but because they waste time, money, and effort building the wrong product.

3. Unique Value Proposition:
Why should stakeholders use your products. What value are you providing to them?
Examples:
•Newness
•Performance
•Design
•Price
•Cost reduction
•Convenience/Usability: making things more convenient and easier to use.
Note: this is one of the most important boxes on the canvas and also the hardest to get right. The good news is you don’t have to get this perfect right away. Like everything on the canvas, you start with a best guess and then iterate from there.

4. Solution:
Once you understand the problem, you are then in the best position to define a possible solution. Purposefully the lean canvas constraints entrepreneurs–through the use of a small box on the canvas–because the solution is what we are most passionate about. Write down in a clear and concise sentence or bullet points how your solution solves the problems your stakeholders have.

Exercise # 1

Spend the next 20 minutes working on boxes 1-4 of the Lean Canvas.

CUSTOMER VALIDATION:

What is customer validation?
Customer Development: is a technique startups use to quickly iterate and test their hypotheses by talking to potential customers. Customer development isn’t simply talking to potential customers or running surveys, and focus groups BUT a collection of learning tactics that when deployed correctly yields the fastest way to both learn and build what customers want.

Things you’ve completed:
By now you’ve completed your Lean Canvas. By completing your lean canvas you now have a set of hypotheses that you will have to validate.
You have a set of hypotheses for your:
1. Customer segments: who you believe will buy/use your product.
2. Problem: the top three problems you think you’re solving for them.
3. Solution: your current solution/idea to solve their problems.

Two Part Interview
Customer development consists of two parts:

• The Problem interview
• The Solution interview

The Problem Interview:
Start by introducing yourselves. Hello my name is [Your Name] and I am a student at [Name of your school]. Could you help me/us by answering a few questions about something we’re working on.Note: try not to mention that you’re working on a business idea, or project. The goal is to get unbiased answers.

Then have conversation about:
• Their pains.
• What doesn’t work with alternatives?
• How big is their problem?
• Are there patterns?

For example:
Using Maia’s Acorn Finder idea:
Customers would be squirrels.
So when talking to them I’d ask;
Would you consider yourself a acorn consumer?
If so, ask them how do they currently go about finding acorns?
What solutions have they tried?

Tip: to the best of your abilities, avoid thinking about your idea during the interview – and certainly avoid talking about it. These interviews are about your customers and their problems. Do your best to keep the conversation focused there.
-When you use the word “would”, you’re making a thinly veiled attempt to validate your product…not their problem. Don’t do that.

Sample Script

•What’s the hardest part about [problem context] ?
•Can you tell me about the last time that happened?
•Why was that hard?
•What, if anything, have you done to solve that problem?
•What don’t you love about the solutions you’ve tried?

The Solution Interview:
Important: avoid this if Problem Interview is unsuccessful, you may have to change your solution to solve actual problem stakeholders are having

The Solution Interview consists of having a conversation to validate your solution.
After you’re done with the problem interview you can now start talking to them about your current solution. This will help you understand if your idea solves their actual problems and addresses those pain points they have.
• Does it solve their problem?
• How much is it worth to them?
• Is it a Must-Have?
• Now you can talk about what you’ll build.

Exercise #2

Spent 20 minutes create 5-10 Problem and Solution questions.
These questions will be used to execute your customer development assignment.

Assignment:

Get out of the building or make phone calls
Spend 20-30 minutes of practice on interviews with each other.
Entire team should do customer development
Aim for 30+ interviews

Tips to find customers
• Your network: someone in your team knows someone you could talk to.
• Cold-calling – google potential customers and try to talk to them over the phone. (example: if you’re creating software for a veterinarian
• Be resourceful
• Hustle.

*As define by our strong supporter and creator the of the Lean Canvas – Ash Maurya:

Part 3: Assignment for today
Conduct Customer Development interviews
30 or more interviews if possible

Lean CanvasPart 2

Channels
In the channels box of the canvas write down the different methods you plan to implement to reach your stakeholders.
First, start by establishing if you are a B2B* or B2C* company.
The product distribution channels will different for both. The channels box is very important, they let people know about your product. There are four function of channels:
Communication channel
Distribution channel
Sales channel
Post-sales channel

The good thing is that while you were conducting Customer Discovery interviews many of you started to wonder about how your stakeholders will learn about your product.
Channel distribution examples: search engine marketing, friend invites, social media, direct sales, etc.

Revenue Streams:
The Revenue Streams box represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings)

Cost Structure:
This is the method used to determine whether a business model can be successful (profitable), by calculating if an individual unit of the good or service would be profitable. For example, if Mike is considering opening a store which sells pizza, he would calculate the cost of making one individual pizza, and compare it to the price he would charge for the pizza. If the profit is positive, the business is thought to be profitable.

Key Metrics:
•Document the one or two key activities you think will drive usage of your product
•List the key numbers that tell you how your startup is doing

Unfair Advantage:
Once a startup achieves some level of initial success, it is inevitable that competitors and copy-cats will enter the market. If you don’t have a defense against them, you stand a real risk of being made extinct by these fast-followers.
Some examples of unfair advantages – insider information, the right “expert” endorsements, domain knowledge.

Exercise #1

Find it at 3daystartup.org/lean
Use a white board or piece of paper to draw the canvas
Spend the next 20 minutes filling out boxes 5-9 of the Lean Canvas
No need to turn it in: this will become the backbone of your pitch

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